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Corporation A will be receiving 500.000 Canadian dollars (C$) in 90 days. Currently, a 90-day call option with an exercise price of $.75 and a
Corporation A will be receiving 500.000 Canadian dollars (C$) in 90 days. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. (10 points) a. If the Corporation does not hedge, how much US dollar can it receive? b. The Corporation now plans to purchase options to hedge its receivable position. Assuming that the spot rate in 90 days is $.71, what is the net amount in dollar received from the currency option hedge? And what type of option does Corporation A purchase
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